As you may expect, home mortgage loan mitigation is not a one size fits all endeavor.
The universe of possible solutions is vast. It's always recommended to use an attorney
who is licensed to practice law in your state. It's also imperative that when you
seek loan modifications, you should have an attorney that will thoroughly review
your circumstances and desires before recommending a course of action. Your financial
circumstances, your existing loan documentation and legal rights should always be
reviewed and considered. An attorney will work with you to achieve a solution which
fits for you and your family. While other organizations may simply submit a loan
modification request, which may be ignored by the lender, an attorney will actively
and aggressively negotiate the most advantageous solution for their clients through
a tough course of arbitration or litigation.

In many cases, an attorney will contact your lender and get them to delay the foreclosure
process without filing bankruptcy. Such a scenario allows an attorney the opportunity
to negotiate a "win-win" resolution for both sides. Foreclosure is generally a very
costly option for lenders. In certain instances, a modification of the existing
loan is a good solution. Depending on circumstances, a deed in lieu, also known
as "cash for keys" or "walk away" may be the right solution to keep a foreclosure
off your credit report. There are many possible solutions to resolve a situation
where a homeowner is either behind on payments or likely to fall behind in the near
future. Such possible solutions include a modification or restructuring of the terms
of your current loan to lower your mortgage payments, a recapitalization and principal
balance reduction, a rescission of your current loan (up to three years) or a lawsuit
against the mortgage company for predatory lending violations if determined to be
appropriate after a proper loan document audit. There are many other possible resolutions
as well. An attorney will assist you to determine which possible option is best
for you.

Currently, Aurora, Citibank, Chase, Countrywide, GMAC, Litton, Wachovia and WAMU
are among the major lenders routinely offering loan modifications. Although many
lenders are willing to consider loan modifications, many lenders are unable to keep
pace with the current demand for loan modifications. Even in cases where the borrower
is currently in default, a lender offered forbearance agreement may not be the best
resolution for the borrower. An attorney may be able to stop foreclosure by negotiating
a loan modification; even in cases where a previous forbearance agreement has failed.
Because we process many loan modification requests, our current relationships with
lenders and loan servicing companies may allow us to bypass overwhelmed loss mitigation
personal and negotiate directly with asset and portfolio managers as well as the
lender's legal department.

In order to secure a loan modification, an attorney will make use of the tools provided
by federal law. Such federal tools include both the Truth in Lending Act (TILA)
and the Real Estate Settlement Procedures Act (RESPA). Both state and federal laws
require mortgage companies to adhere to certain guidelines when originating home
loans. Some existing mortgage loans have TILA and/or RESPA violations. When such
a violation is determined to have occurred, an attorney will utilize such violation
as leverage to negotiate a favorable resolution for our clients. Generally, lenders
will seek to avoid costly litigation and are more agreeable to reaching voluntary
solutions when such violations are identified and brought to their attention by
qualified law firms.

During times of real estate booms, some brokers and lenders engage in unfair or
illegal practices to close loans. An example of these practices may include charging
unexplainable or unreasonable fees and charges. Other examples include not fully
explaining interest rate adjustments, pre-payment penalties or the implications
of option ARM loans with minimum payment options. Additionally, some brokers and
lenders illegally inflated or otherwise manipulated financial statements to qualify
buyers who would otherwise not have qualified for their loans. Simply refinancing
out of these inappropriate home mortgage loans is now generally not an option because
of declining property value or debt to income ratios.

An attorney can help to identify if you have been the victim of such an issue. In
such a case, we can attempt to resolve these issues fast and efficiently so the
borrower doesn't fall victim to foreclosure proceedings. Helping stop foreclosure
and restoring financial stability for our clients is our main goal.

There are additional reasons to conduct a detailed review of the client's mortgage
home loan documents. If a lender fails to properly provide adequate notice of the
borrower's right to cancel, the right of rescission may be available to the borrower
for up to three years. When such right is extended for three years, the borrower
may be able to rescind the loan during such period. In such a circumstance, the
loan is treated as if it never existed. Essentially, the borrower becomes entitled
to all profits made by the lender as a result of the loan. As such, the lender or
other creditor would be required to refund all interest paid, all closing fees,
all broker fees, and even pay the borrower's attorney fees. This circumstance can
create a legitimate windfall to the borrower. The extended right of rescission is
a powerful tool to assist borrowers who have been victims of predatory lending.
An attorney can assist in determining if such a right exists and will assist its
clients in exercising such right in appropriate circumstances.

Mortgage and loan servicing companies generally do not want your home and most will
work diligently with a law firm to avoid foreclosure. Litigating mortgage fraud
and predatory lending cases can become costly for both sides and should be avoided
unless the lender will not comply or there are significant damages to the borrower.
Our clients retain us to make a best effort at resolving their hardship and to fight
for their rights. In most cases, the client's goal can be realized without costly
litigation by using existing relationships to find an amicable resolution to stop
foreclosures.

A loan modification proposal offered by a law firm may result in a more favorable
loan modification agreement than your lender will offer you directly. Many modifications
offered by mortgage lenders and loan servicing companies are forbearance agreements
and are not a true modification to the terms of your mortgage. These types of agreements
generally do not benefit the borrower in the long term and home owners facing foreclosure
should consult with a law firm and fully understand the terms and ramifications
before signing any of these documents.

In cases where neither refinancing nor a loan modification is a possibility, a short
sale or a deed in lieu may be among the best options to both avoid foreclosure and
a deficiency judgment. An attorney can help borrowers navigate through the possible
options to determine which resolution is best for your particular circumstances.
A real estate short sale occurs when the lender agrees to discount the loan balance
and accept the sale proceeds in full satisfaction of the outstanding debt. In such
cases, the lender has the right to approve or disapprove of the proposed sale. Lenders
are generally inclined to agree to a short sale if they determine such action will
mitigate losses as compared to foreclosure. The advantages of a short sale to the
borrower include avoiding a foreclosure reported on credit history and mitigating
or eliminating a possible deficiency. A short sale is generally faster and less
expensive than a foreclosure. In summary, a short sale is a negotiation with a lender
resulting in a payoff less than what is currently owed.

Not all lenders are equally amenable to short sales. Many lenders have pre-determined
criteria for such transactions. Distressed lenders may accept any reasonable offer.
However, junior lien holders such as second mortgages, HELOC lenders, and HOA (special
assessment liens), may also need to approve of any short sale. Objectors to short
sales sometimes include tax lien holders (income, estate or corporate franchise
tax - as opposed to real property taxes, which have priority even unrecorded) and
mechanic's lien holders. It may be possible for junior lien holders to prevent a
short sale. Additionally, lien holders who are not mortgagees are generally unlikely
to forgive the debts owed to them.

While a short sale appears on a borrower's credit report differently than a foreclosure,
a short sale may nonetheless have severe consequences for the borrower in the future.
A short sale may appear on a borrower's credit report as "foreclosure proceedings
started." While not a foreclosure, a short sale may prevent the borrower from obtaining
a new mortgage for seven or more years. Short sales are complex matters which should
be handled carefully by experienced professionals.

The loss mitigation industry is a recent advent and has become large as a result
of the current economic and real estate crisis. The loan modification industry is
currently inundated with marginally qualified or unethical individuals, who are
essentially salespeople, who have accepted fees in exchange for half hearted efforts
or no efforts at all to provide loss mitigation services, loan modification or stop
foreclosure services. As such, several states are currently considering legislation
which requires attorney involvement for loan modification requests.

Some companies offering loan modification services claim to be "attorney backed"
or "attorney based" in their marketing. In such a case, borrowers should be aware
they are not contracting with or engaging the services of a law firm. Some companies
simply hire an attorney for consultation to claim an association with an attorney.
In such a case, the attorney does not represent the borrower and the company is
not bound by the same ethical duties required by licensed attorneys. Additionally,
no attorney client privilege exists with such a company and statements made to them
are discoverable. To be sure, the borrower is encouraged to request to speak personally
with the attorney.

IMPORTANT NOTICE "Attorney based" loan modification companies are not law firms.
As such, when you discuss the details of your mortgage with these companies, there
is no attorney client privilege. Any conversation you have with a non-law firm loan
modification company is discoverable by a state agency and not protected by attorney
client privilege and therefore not confidential. Prosecuting agencies have become
much more aggressive recently in bringing prosecutions for mortgage fraud based
on overly optimistic or inflated representations regarding income or monetary reserves
at the time of qualifying for the loan. Therefore, if you are concerned that statements
you made on your mortgage loan application could be construed as false and you are
at risk for foreclosure, please contact CAPITAL LAW CENTER Robert W. Carlson & Associates,
P.A. immediately. Do not discuss this issue with anyone other than a licensed attorney.

This Detailed Explanation of the Flaws in Lenders and Banks Loan Modification Programs

Diane E. Thompson's testimony before the US Senate Committee on Banking, Housing,
& Urban Affairs regarding the barriers encountered by homeowners when attempting
to deal with banks for loan modifications and foreclosure assistance.

Disclaimer:
The information contained herein is provided for general information purposes only and is not intended to convey a legal option nor legal advice for any particular case or situation. Nothing in this website shall create an attorney-client relationship. Nothing sent to this office via e-mail shall constitute an attorney-client relationship. Nothing contained in this website shall be construed to be a guarantee or prediction of result.